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Two Worlds was a laughing stock. There's no point in pretending otherwise. A vaguely Oblivion-esque roleplaying game, it reliably failed to match its ambition with its budget, resulting in a buggy, bizarre thing with a script seemingly written by a madman drunk on tramp juice. The one thing it did get right was timing - fairly hot on the heels of Oblivion, and something a little refreshingly different in the 360's relative youth. Also, it let you strap multiple swords together to make one even better sword. There's no arguing that that's a bad idea, right? Snickerfest it might have been, but the 2007 RPG sold well enough to warrant a sequel , one that we're told will be much, much better: built new from the ground up, rather than being simply more Two Worlds. That's your cue to stop sniggering at the back and pay attention.

The improvement starts with a new engine, known as Grace - apparently so impressive that some of its code is being used in college-level textbooks. "It's truly a next-gen title", claims Producer Scott Cromie. In person, it's pretty enough, though in the build we saw, it seems to spend more of its energies on incidental lighting effects than on especially convincing character models. Dynamic lighting, bump-mapping, weather effects, bendy grass, physics: y'know, the works. "Everything moves the way think it would", says Cromie in reference to the various tumbling crates and swinging chandeliers on show.

With a development team twice the size of Two Worlds 1's, it's really not just a cheap second ride on the same merry-go-round. And while Two Worlds 1's 360 version was something of a brute-force port of a fairly complicated PC game, this time around console play comes first - so it should hopefully feel that much slicker in the hand. "We made a beautiful engine, then decided to make a console game," says Cromie. "I am confident this is a triple-A game." It's hard to say if we agree or not at this stage - much of the game is still to be shown, most especially the super-secret multiplayer mode, more on which shortly. Two Worlds II's certainly fat with promise and ideas, but it's incredibly difficult to get a good sense of an RPG without immersing yourself in it for several hours.

So that's the technology, but arguably more important is the writing. The broken English of Two Worlds 1 was either its greatest failing or its greatest triumph. Certainly, the repeated demands by a bloke who appeared to be wearing a homemade Darth Vader costume that we visit 'the goat cave' gave it a special atmosphere all of its own.

"We wanted to add a more North American feel to it", explains Cromie. Unlike the first, this isn't being cursed/blessed with an in-house translation by Polish developers Reality Pump, but instead it's being co-written by developers at the US-based publisher Topware. Out goes the crazed cod-Shakespearean dialogue, in come modern cuss-words and a slew of detailed, enthusiastic and native-English in-game journals to consolidate and bulk up Two Worlds' patchy lore. Nonetheless, it picks up TW1's plot, the main points of which involve an evil god enslaving the land of Antaloor and maintaining sinister control of the player character's impractically-dressed sister. In keeping with recent RPG trend - see The Witcher and Dragon Age – Two Worlds II is subverting fantasy fiction stereotypes a little. Most notably, early in the game you find yourself allied with some orcs - traditionally (and in the TW1) the mortal enemies of swords'n'spells-based humankind. The reason for this erosion of fictional racism is a key plot point later in the game. As is the icky origin of the freaky Oculus, a floating eyeball you can use as either spy-camera or remote-controlled magic missile, which eventually becomes a big part of your fighting style.

Those Oblivion/Fallout comparisons far are less apt than with Two Worlds 1, as this is largely a linear game, heavily tied to its story. There are plenty of side-quests and optional explorey bits, however - Topware claim you could happily play it for some 200 hours should you so wish. The world's 25% larger than Two Worlds 1's, and is "so big you have to use a horse", reckons Cromie. While there is talk of some important moral agonising to be done, for the most part it's a game of combat. Melee, archery and spellcasting all take equal pride of place, and there's no fixed class system that binds you to just one. You'll even be able to shift skill points around and respec if you want to take your guy in a different direction, plus you can insta-switch between multiple armour sets to suit whether you're trying to stab, shoot or magick someone in the face. The boldest thing it's doing in terms of combat is an attempt to realise those long rows of toolbars you see in PC RPGs and MMOs on a system that doesn't have the luxury of a keyboard's many buttons. A click on the right thumbstick brings up a radial menu, loaded with all your kit and abilities - the idea being you can grab something that the facebuttons and triggers don't cover without having to break immersion and action by delving through a vast inventory menu. It's likely to be most useful for spellcasting, breaking the tradition (e.g. Fable 2) of being frustratingly limited in terms of what dark trickery you can unleash on the spot. Or at least that's the plan. Plenty of games have claimed to have finally found a fix for this or that thing that gamepads historically suck at, but all too often they only end up complicating the problem in a new way. If Two Worlds II can pull it off, then it'll be a landmark moment for console roleplaying games, and opening the door to MMO-style complexity on the 360 and PS3.

Which brings up the multiplayer, something that Topware is resolutely refusing to yield many details on thus far. What they are saying is tantalising stuff like "it's the closest to an MMO you'll ever get on a console" and "it blows my mind, some of the stuff that Reality Pump are doing." They also reckon Microsoft are rather excited about it - and if they're right about the whole MMO thing, with good reason. It's still the place where consoles generally fear to tread, but someone's going to crack it sooner or later.

In a lot of ways, it's only the name that ties it to Two Worlds 1 - even the most ardent Antaloor explorer probably wouldn't recognise them as being related otherwise. Oh, except for one thing - those swords you can strap together. While a little buffoonish in concept, in practice it was a great way of staving off buying expensive new weapons, and of clearing your inventory in a hurry. Find an identical one, glue to your old one, and somehow it became a little better at smiting.

Two Worlds II keeps the idea, but makes it a whole lot more logical - now, you disassemble unwanted weapons, and turn the parts into upgrades for your better stuff. "If you love a specific item, you can upgrade to it to hang onto it", explains Cromie.

It's a fun approach both to crafting and to the loot compulsion inherent in most any RPG. Rather than buy/sell/buy/sell, you build. And try not to think about the fact you're trying to save the world whilst walking around with a load of leather and wood in your pockets. Well, it wouldn't be Two Worlds if it wasn't at least slightly ridiculous...